MOUNT VERNON — Knox County’s school districts presented five-year forecasts during their November board meetings, with much discussion centered around expected financial changes related to the Fair School Funding Plan.
Per-pupil costs are based on actual expenses under the plan, calculated on a district-by-district basis. Previously, districts saw deductions for students who decided to attend school out of district, whereas now districts will be directly given a complete net amount based on enrollment.
Funding education is a topic lawmakers have been debating for decades.
The Ohio Supreme Court has ruled four times in the past several decades that Ohio’s school funding system was unconstitutional. For example, roughly 20 years ago the DeRolph v. State decision concluded Ohio schools depend too heavily on property taxes for funding. Lawmakers have made several attempts to reform the funding system since, with the Fair School Funding Plan being the most recent and one of the first large-scale changes.
The Fair School Funding Plan will start in fiscal year 2022. The specific dollar amounts each district will receive are not due to be released until December, however Knox County school district treasurers’ presented forecasts based on expected funds using enrollment numbers.
While the plan changes to district educated enrollment may reduce funded enrollment for districts, it will also potentially reduce tuition cost.
The new school funding formula also incorporates districts’ student wellness and success funding. For the years to come the funding schools and districts receive for these types of funds — remaining funds from previous years and future Disadvantaged Pupil Impact Aid and Base Cost Student Wellness and Success Component — will be restricted, meaning Ohio law directs where and how the funding can be spent.
Restricted funds for Knox County districts are expected to increase as a result.
The majority of districts in the county expect to see revenue exceeding expenses this fiscal year. But, fewer see consistent revenue exceeding expenses throughout the course of the next five fiscal years.
Mount Vernon expects expenditures to be less than revenue by $2,709,671 in the 2022 fiscal year. However, by the fifth year of the forecast (2026), expenditures are projected to be greater than revenue by $1,462,169. The aforementioned means Mount Vernon needs to cut its projected expenses for 2026 by 3.25% in order to balance its budget without additional revenue.
Similar trends are seen with the district’s cash balance, which is expected to be positive at the end of 2022 but projected to worsen by 2026.
“We’ll be able to hold off on deficit spending for several years,” treasurer Gary Hankins said during the November board meeting.
Elementary and Secondary School Emergency Relief funds allowed the district to offset salaries and create new positions to close learning gaps (positions to be phased out as money is used). Hankins said the influx of federal funds in particular has given the district more solid financial footing.
“We’re in a better place, at least for the next couple of years,” Hankins said. “If we’re wise with the funds we have, we shouldn’t have a need to go to the ballot anytime in the next few years.”
Danville expects expenditures to be less than revenue by $719,188 in 2022, but by 2026 the district expects to have a revenue shortfall — similar to Mount Vernon. Specifically, expenditures are projected to be greater than revenue by $1,025,106.
Danville will also need to cut projected 2026 expenses to balance its budget without additional revenue, specifically by 11.75%.
Similar cash balance trends to Mount Vernon are also expected in Danville, with Danville’s balance positive at the end of fiscal year 2022 but projected to worsen by fiscal year 2026.
East Knox expects to see revenue greater than expenses in the coming years, although the difference is expected to shrink. Expenditures are expected to be less than revenue by $1,926,365 in 2022 and by $278,806 in 2026.
East Knox does not anticipate increases in state funding in the remaining years of the forecast, specifically because of flat enrollment and current state funding methods.
“The district was fortunate to have the emergency levy passed in November 2016 by the East Knox community,” treasurer Jessica Busenburg wrote to Knox Pages. “We want the community to know that we are still very thankful and fortunate for that passage and want the community to be confident in the decisions being made.”
East Knox will also use ESSER II funds to supplant some teaching positions for the next couple years.
“For the 23-24 school year, these costs have been built back into the forecast as general fund expenditures,” Busenburg wrote.
Fredericktown is similarly expected to have revenue exceeding expenses for the next five years — but also at a decreasing difference between the two.
In 2022, the forecast shows the district at $520,805 excess revenue over expenditures. In 2026, the district is estimated to have $152,231 excess revenue over expenditures.
Unrestricted, restricted, all other operating revenues and purchased services will see the largest changes throughout the next five years due to the Fair Share School Funding Plan, treasurer Heather Darnold said during the district’s November school board meeting.
“We’re not at the lowest (enrollment), but we’re still not at the highest we’ve ever been,” Darnold said.
Centerburg sees revenue exceeding expenditures during the current 2021 year, specifically by $138,345.
However, according to the projected data for the next five years, Centerburg expects to see expenditures exceeding revenue through 2026, when the district expects to see $1,019,108 in expenditures and other financing uses over revenues and other financing sources.
However, Houck thinks expenditures will end up being less than forecasted.
“I tend to be very conservative when forecasting revenue, using historical averages and also very small forecasted increases in state revenue, due to all of the unknown factors,” treasurer Lori Houck wrote in an email to Knox Pages.
There are several changing variables for the district in the years to come, including state funding changes under the Fair School Funding Plan and changes to the district’s employee insurance plan, which Houck is hopeful will save the district from large insurance premium increases in future years, she wrote.
Until results from the changes are seen, Houck noted she’s hesitant to include them in financial projections.
Knox County Career Center is also projected to see expenditures exceeding revenue for each of the next five years. Expenses are projected to exceed revenue in 2022 by $185,890, and in 2016 by $455,022.
“Although we are spending more than the revenue we receive, we are doing very well at making our current funds last,” treasurer Tracy Elliott wrote to Knox Pages.
State revenue will appear to be higher but expenses will also be higher as the district shifts the way it accounts for these funds.
“The latest projections show about $140,000 in additional state revenue for the current year and approximately $250,000 in the next fiscal year,” Elliott wrote.
Schools are required to complete five-year forecasts twice per year for the Ohio Department of Education. The forecasts are used as tools to communicate and assess the financial health of school districts, however the information is extrapolated into estimates and forecast variables are subject to change.
